World’s largest sovereign wealth fund CEO warns AI bubble could wipe 35% off its value

The person managing $2.2 trillion of Norway’s oil money just posted the best half-year return in the fund’s history. He does not sound particularly happy about it. Nicolai Tangen, CEO of Norges Bank Investment Management, told Bloomberg he remains deeply cautious about forward-looking risks despite the Government Pension Fund Global delivering a 9.4% return in the first half of 2026, equivalent to 1,753 billion Norwegian kroner. His worry list reads like a greatest-hits album of things that keep institutional investors awake: inflated AI valuations, sticky inflation made worse by tariffs, and geopolitical conflict that shows no signs of cooling. Record returns, record anxiety The fund’s equity portfolio returned 13.0% in the first six months of 2026, beating its benchmark by 0.22 percentage points. Asian technology stocks were the primary engine behind those gains. In stress-test scenarios shared during the Bloomberg interview, Tangen laid out what a severe correction could look like. An AI bubble bursting could shave roughly 35% off the fund’s total value. A major geopolitical upheaval scenario was even worse, modeling a potential 37% decline. For a fund exceeding $2.2 trillion in...